The European Commission has published the long-awaited final draft of its delegated acts defining ‘renewable’ hydrogen for use as a renewable fuel of non-biological origin.

The acts will be sent to the European Parliament and Council of the EU for a two-month period of scrutiny, after which they will be accepted, rejected or subject to a further two months of review—although they cannot be amended from the current draft.

The EU’s delay in adopting a clear definition of renewable hydrogen has been a hurdle for developers both within the bloc and for those planning export-oriented projects. The announcement of an auction later this year—in response to the US’ Inflation Reduction Act, which set out a production tax credit based on emissions intensity—had prompted further calls from industry for a definition to be set.

A key area of contention is the Commission’s effort to ensure the large volume of renewable power needed to feed electrolysers comes from “additional” sources, rather than diverting supplies from other applications.

“A far-from-perfect regulation is better than no regulation at all” Chatzimarkakis, Hydrogen Europe

The Commission’s final draft softens its position on this slightly. It stipulates that, up to the end of 2029, hydrogen produced using renewable electricity supplied under power-purchase agreements, or via a new storage asset charged within the same month must be matched to power production in the same calendar month.

However, from 2030, hydrogen must be matched with renewable electricity on an hourly basis across the EU—although the Commission allows member states to introduce this rule from as early as July 2027. A previous draft required hourly matching from Q2 2028, with quarterly matching up to the end of March.

The latest draft also keeps in requirements for production to be matched to new renewable energy assets brought online within three years of the electrolyser. The Commission has included a grandfathering clause allowing exemption from additionality criteria up to 2038 for projects that have come online before January 2028.

Nuclear option for grid electrolysis

The Commission has also softened rules for hydrogen production powered by electricity flowing directly from general power grids to be considered renewable. Previously, grid-derived hydrogen could only qualify as renewable in locations where renewables made up 90pc of the grid.

Now, grid-derived hydrogen can also comply if the grid has an emission intensity of electricity lower than 18g of CO₂e/MJ and if a renewable PPA is signed for the equivalent electricity consumed.

This change is likely to benefit France, which has a low carbon intensity for its grid—owing to a high proportion of nuclear power in the mix—but a relatively low share of renewables.

The Commission clarifies that hydrogen produced directly from nuclear power will not count as renewable, although it may count under proposed criteria for ‘low-carbon’ hydrogen in its hydrogen and gas markets decarbonisation package currently being negotiated.

Hydrogen can also be produced from the grid during periods when renewable supply would otherwise be curtailed.

Growth constraint?

While the final delegated act softens renewable criteria from previous drafts, lobby group Hydrogen Europe argues the rules will make green hydrogen projects more expensive and limit potential for expansion.

“A far-from-perfect regulation is better than no regulation at all. At last, there is clarity for industry and investors and Europe can kickstart the renewable hydrogen market,” says Jorgo Chatzimarkakis, Hydrogen Europe CEO’s. “This comes at a critical time, with the US setting a very high benchmark with their production tax credits, offered under the Inflation Reduction Act, attracting more and more investments towards their clean hydrogen market’’.

“The European Commission will carry out a review process by 2028 on the introduction of hourly temporal correlation from 2030, and so could possibly avoid treating renewable hydrogen unequally to any other electricity-consuming sector,” he adds.

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Author: Polly Martin